Owner of a Parcel of Land, Who Sub-Divides the Same into Several Lots to Demand a Higher Price and Sells or Offers for Sale Said Lots to the Public

May 6, 1960 BIR RULING NO. 237-60 Mrs. Josefa R. Sandiego Castelo 8 South A, Quezon City M a d a m : With reference to your letter dated May 5, 1960, I have the honor to inform you that an owner of a parcel of land, who sub-divides the same into several lots to demand a higher price and sells or offers for sale said lots to the public, is considered a real estate dealer within the purview of Section 194(s) of the Tax Code, as amended. LLjur In your case, it appears that you are the owner of more than two hectares of land (inherited from your deceased parents) in Polo, Bulacan, and that "in order to get a better price", you decided to subdivide said land and sell them into lots. With these facts, as presented, you are considered a real estate dealer pursuant to the provision of law above-cited, and as such, subject to the initial fixed annual tax of P150.00 and subsequently to the graduated rates imposed by Section 182(A)(3)(s) of the same Code for the succeeding years, based on your annual income for selling said lots, to wit: Fixed Annual Tax Annual Income P150.00 if the annual income is P4,000.00 or more but not exceeding P10,000.00 P300.00 if such annual income exceeds P10,000.00 but does not exceed P30,000.00; and P500.00 if such annual income exceeds P30,000.00 In this connection, you are required to keep books of accounts wherein all transactions in connection with your business as a real estate dealer must be recorded pursuant to Section 334 of the same Code. Needless to say, said books of account must be registered with and approved by the Bureau of Internal Revenue prior to the use thereof. liblex Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue